All and Bahadur are partners in a form sharing profits and losses as Ali 70% and Bahadur 30%. Their respective
capitals as at 1st April 2019 stand as Ali 25,000 and Bahadur 20,000. The partners are allowed interest
on capitals @ S% pa Drawings of the partners during the year ended 31st March, 2020 were * 3,500 and
*2,599 respectively,
Profit for the year before allowing interest on capital and annual salary of Bahadur @ 73,000, was 40,000,
10% of divisible profit is to be transferred to Reserve.
Prepare Partners Current Accounts and Capital Accounts recording the above transactions.
Answers
Answer:
ANSWER
PROFIT AND LOSS APPROPRIATION ACCOUNT
Particulars Amount Particulars Amount
To Interest on Capital
Ali- 25000*5%=1250
Bahadur=20000*5%= 1000 2250 By net profit 40000
To Bahadur's salary 3000
To reserve 3475
To profit transferred to
Ali's Capital A/c 21892
Bahadur's Capital A/c 9383 31275
Total 40000 Total 40000
PARTNER'S CAPITAL ACCOUNT
Particulars ALI BAHADUR Particulars ALI BAHADUR
To bal c/d 25000 20000 By bal b/d 25000 20000
Total 25000 20000 Total 25000 20000
PARTNER'S CURRENT ACCOUNT
Particulars ALI BAHADUR Particulars ALI BAHADUR
To Drawings 3500 2500 By interest on capital 1250 1000
By salary 3000
By P/L Appropriation A/c 21892 9383
By bal c/d 19642 10883
Total 22775 13225 Total 22775 13225
Working Notes: Calculation of amount to be transferred to reserve
10% of divisible profit
10% of (40,000-2250-3000) = 3475